Topic: compensation

6 Factors in Valuing Total Goodwill of a CPA Firm

Valuing a CPA firm for partner retirement purposes is much different than a valuation for merger purposes. By Marc Rosenberg Retirements & Buyouts Profitable, attractive firms, generally under $2 million, sold in a market with many potential buyers, will often fetch 110 percent to 150 percent of fees. If this is the case, why do CPA firms value goodwill for retirement purposes at no more than 100 percent of fees and usually, 80 or 90 percent of fees? Here are six good reasons why:

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When You’ve Retired, How Do You Get Your Money?

9 factors that ensure retirement plans will pay off. By Marc Rosenberg Retirements & Buyouts When a partner group crafts their firm’s partner retirement plan, they are hopeful that the plan will play an important role in their financial futures. They are guardedly optimistic that their buyouts will be realized. But the path toward the retirement payday is a perilous one. Many actions are necessary and a number of obstacles must be overcome for a firm’s partner retirement plan to pay off.

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Accounting Salaries to Rise 3.5%

Top trends: Flexible staffing, retention challenges…

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Top 7 Reasons CPA Firms Fail in Planning for Partner Retirements

1 in 6 firms have no formal, written exit plans in place. By Marc Rosenberg Retirements & Buyouts Despite the clear, substantial value of a CPA firm, roughly 15% of multi-owner CPA firms – mostly firms with up to four partners – do not have a formal, written partner retirement plan. Why?

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Surprise! A Partner Retirement Plan Is Not a Savings Plan

Do it wrong and your firm could lose a pile of money. By Marc Rosenberg Retirements & Buyouts Partners have a natural tendency to view the firm’s partner retirement plan as a personal savings plan, but that’s not how these plans work. CPA firm retirement plans are quite different.

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The 5 Main Reasons the Appetite to Acquire Smaller Firms Will Remain Insatiable

Apparently, they’re worth it. By Marc Rosenberg Retirements & Buyouts An ample supply of willing buyers is a critical factor that strengthens and confirms the value of any asset, let alone a CPA firm. Virtually every firm, from sole practitioners to the Top 100, is eager to acquire a smaller firm. Why is this?

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What a CPA Firm Is Worth

Look at the revenue stream. Goodwill is another story. By Marc Rosenberg Retirements & Buyouts To illustrate a CPA firm’s value, let’s use an example of a plain-vanilla or average firm: Annual revenues: $6 million. Six partners with ages spread evenly between 45 and 62. Average partner income: $350,000. Ratio of professional staff to partner is 3.5. Firm is located in a city with a population in excess of 1M. Clients are all in common industries such as manufacturing, real estate, health care, etc. No niches or specialties. Services are all traditional annuity types such as accounting and tax. The firm’s accrual basis capital, primarily WIP and A/R, is $1.2M. Now, let’s compute the value.

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‘Show Me the Money!’ Partners Balk at Retirement Planning

Planning for changing expectations…

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Are Bad Clients Driving You Crazy?

16 ways to tweak your compensation systems to get and keep the right clients. If your partners are putting up a fight to keep clients who should be let go, take a look at your compensation system. It’s not just about billable hours. August Aquila, Creating the Effective Partnership, suggests 16 tweaks to your firm’s compensation system. While the list is not exhaustive, it does provide criteria that firms can consider beyond revenue.

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6 Reasons Why CPA Firms Fail in Innovation

The compensation trap that turns winners into losers. By August Aquila Creating the Effective Partnership The focus on most CPA firms is on billable hours. While there is nothing inherently wrong with this focus, it has become the overriding focus of firms. There is nothing wrong with making money today, but what about building for the future? With “today” being the dominant focus, what is the encouragement to CPAs to innovate?  In most firms there is no alignment with innovation and compensation. You will never have innovation unless you allocate some time and reward to making it happen.

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CPA Trendlines Forum: Tax Season Prep Tips?

Readers’ Forum: Hours worked. Firing clients. Setting prices. Chris Basom, managing partner of Your Money Matters in Mission Viejo, Calif., wants to know the “one thing you wanted to implement before tax season but just couldn’t get to.” “Is cash still relevant?” asked solo practitioner Roxann Otto of Otto Tax & Accounting Services in Slinger, Wis. Charles G. Read in the Melbourne, Fla., area would like to know how other accountants arrive at the charges they present. Deborah McDowell Cain of her eponymous firm in Fort Worth, Texas, asked, “Does your firm work five, six or seven days a week? Is overtime for staff mandatory? Are senior staff hourly, salaried, offered overtime or comp time?” And harking back to the busy […]

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Why Is It Always about Partner Compensation?

Good service needs to be rewarded as much as business development. By August Aquila It seems like no matter what the topic is at partner meetings, it always reverts to compensation. There isn’t a partner out there who is not interested in his or her compensation, and maybe even more interested in what the other partners make.

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How to Use Compensation to Keep Partners Engaged

The 9 essential elements for a successful partner comp plan. By Robert J. Lees and August J. Aquila Creating the Effective Partnership Every compensation plan should be constructed to help the firm achieve its strategic goals, including servicing its clients and attracting and retaining the right people.

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